AUD/USD sticks to Australian CPI-led gains, comfortably above 0.7500 mark

• A combination of factors pushed AUD/USD higher for the third successive day on Wednesday.
• The risk-on mood and stronger Australian CPI print underpinned the perceived riskier aussie.
• A subdued USD price action did little to provide any impetus or hinder the intraday move up.

The AUD/USD pair held on to its intraday gains through the early European session and was last seen hovering near daily tops, around the 0.7530 area, up 0.40% for the day.

This pair gained traction for the third successive day and shot to fresh weekly tops on Wednesday following the release of Australian consumer inflation figures. The headline CPI rose 0.8% in the third quarter, as expected, and the yearly rate decelerated to 3.0% from 3.8% previous. However, the Reserve Bank of Australia's favours trimmed mean inflation rose 0.7% during the July-September period, pushing the annual pace above the 2% mark for the first time since 2015.

The data could add pressure on the RBA to further reduce its monetary stimulus in the near future, which was evident from a spike in the shorter-dated Australian government bond yields. This, along with the prevalent risk-on environment, provided a goodish lift boost to the perceived riskier aussie. Apart from this, a subdued US dollar price action remained supportive of the AUD/USD pair's intraday positive momentum back closer to multi-month tops touched last Thursday.

The USD struggled to capitalize on the overnight gains led by stronger US macro data and remained on the defensive, though prospects for an early policy tightening by the Fed acted as a tailwind. Investors seem convinced that the Fed would be forced to adopt a more aggressive policy response in 2022 to contain stubbornly high inflation. Hence, the market focus will remain glued to the release of the US Core PCE Price Index on Friday.

Beyond this, Thursday's Advance US Q3 GDP report will set the tone heading into next week's RBA and FOMC monetary policy meetings. In the meantime, traders might take cues from Wednesday's release of US Durable Goods Orders data. This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and produce some trading opportunities around the AUD/USD pair.

Technical levels to watch